Sponsored post by Principal Preservation Services and Principal Wealth Services
Does the state you live in impact your income and lifestyle? In a recent National Federation of Independent Business article, Minnesota came in towards the top as one of the highest-taxed states in the U.S.
Here are some of the tax areas that are affecting the people living here in Minnesota and forcing them to consider moving elsewhere:
Social Security
Minnesota is one of 12 states in the U.S. that still taxes Social Security. They did pass legislation a couple of years ago that now only taxes Social Security once your income exceeds a little over $82,000 for single filers and $105,000 for joint filers. It’s nice that they gave some tax breaks, but they didn’t eliminate it like other states have. For people who fall over that threshold, they will be paying an extra $200-$500 per month in state taxes on their benefit.
Pensions
38 states have helped retirees on fixed incomes to not tax their pension or offer substantial exemptions for those on a fixed income in retirement. Minnesota is not one of those states. It’s estimated that Minnesota loses 10-15% of retirees because they seek refuge in more tax-friendly states like Florida, Texas, Arizona, Nevada, and Tennessee.
Income tax rate
Minnesota ranks as one of the highest income taxed states in the U.S. There are four tax rates in Minnesota and the highest bracket is at almost 10% (9.85%), which is a deciding factor to the upper middle class and wealthy to look at other options to save on taxes. To compare, if a household makes $250,000 combined, they would pay around $1,600 a month more in taxes compared to someone living in a no-tax state like Florida. Even if you are making $100,000 combined, that’s still a savings of around $625 a month.
Estate taxes
Minnesota is one of 12 states that have an estate tax on estates of $3 million or more per individual. These rates are from 13% to 16% and will cost your estate a lot of money to pass on in Minnesota. Remember, these assets were already taxed at one point and this, in my opinion, is double taxation.
Mike Kojonen
Mike Kojonen is an Investment Advisor Representative and the founder and owner of Principal Wealth Services and Principal Preservation Services. He can be reached at: zvxr@cevapvcnycerfreingvbafreivprf.pbz
